Indian Ferro Chrome Producers Forced To Cut Domestic Offers

Indian producers of Ferro Chrome have been forced to cut their domestic offer prices after export sales setback.

SteelMint assessed ferro chrome price levels reduced and being traded at around INR 60,000/MT (Ex-Odisha), which translates to around 70 cents/lb. Most Ferro Chrome producers have considerably reduced their production in line with sinking prices and poor demand for the Alloy.

The domestic ferro chrome market has trended down on very low volume deals concluded in the export market, as selling pressure grows on ferro chrome producers, having more material to sell in the domestic market.

Chinese buyers are not showing any buying interest for Indian origin HC Ferro Chrome (60% Cr) above 60 cents/lb CFR China (INR 51,000). However, Indian producers are not willing to sell at these prices, as it is way above their cost of production.

China's Baosteel, one of the major players in the global stainless steel industry, has reduced the purchase price of high carbon ferro chrome by a further 1400 Yuan M-o-M to set it at 5,700 Yuan (USD 839) per tonne for June'17.

Other major Stainless Steel mills decided not to declare their Ferro Chrome tender price for June, citing sufficient inventory of Ferro Chrome for their production requirement. Most Stainless Steel mills are cutting down on their production levels drastically in June, after going on maintenance in May. Moreover, many Stainless Steel producers in China are shifting a significant part of their production capacity to produce Crude Steel, further lowering Ferro Chrome demand from China.

However, domestic Ferro Chrome prices in China is unlikely to go down further with global Chrome Ore prices expected to have bottomed out, as the stronger South African Rand and higher power tariff during winters in the country, limits any further reduction in Chrome Ore prices.

SteelMint assessed that this sharp fall in purchase price is indicative of the fact that Ferro Chrome demand from China's Stainless Steel sector is down drastically and is pushing global Ferro chrome offers to correct significantly.

The weakness in China has affected demand elsewhere in Asia. In Japan and South Korea too trade remained very thin in the week gone by, as buy-side participants sought clearer direction. The spot price of Indian origin high carbon ferro chrome (60% grade) was assessed at 81 cents/lb CIF Japan and 80 cents/lb CIF Korea.

SteelMint learned that most market participants hold a pessimistic outlook towards the future market trend.